Andal Says Year 2000 was a Memorable Year for Tax Law Changes

Dean Andal, Chairman, State Board of Equalization (BOE) remarked today that a number of changes were made to tax laws administered by the BOE during the 2000 legislative session. Legislative changes take effect on January 1, 2001, unless otherwise noted.

Highlights are as follows:

Assembly Bill 511 (Chapter 107, Alquist) provides a 5 percent state General Fund sales and use tax exemption beginning January 1, 2001, for purchases of tangible personal property, as defined, by eligible entities, as determined by the California Infrastructure and Economic Development Bank (CIEDB) board within the Trade and Commerce Agency. An eligible entities is one that complies with all of the following:

The entity locates or expands a business in a California county with an average annual unemployment rate 5 percentage points or more above the statewide average, as specified.

The entity makes a new investment of at least $150 million in the county and maintains that level of investment for at least 24 months after the CIEDB board certifies that the entity is eligible.

The entity employs at least 175 new full-time employees and at least 500 employees must be directly or indirectly employed within the county for a period of 24 months after the CIEDB board certifies that the entity is eligible.

The exemption will expire on January 1, 2006.

Assembly Bill 599 (Chapter 600, Lowenthal) allows entities affiliated with a retailer to claim a bad debt deduction on accounts found worthless that the retailer originally reported as taxable sales on the retailer's sales and use tax returns.

Assembly Bill 2894 (Chapter 923, Committee on Revenue and Taxation) allows a purchaser to issue an exemption certificate to a fuel vendor for an amount equal to the sales or use tax on the federal manufacturers' or importers' excise tax imposed on his or her qualifying and nonqualifying fuel purchases under specified circumstances; authorizes the Board to prescribe a method to authenticate electronic returns and applications filed with the Board; eliminates the requirement that settlement disputes totaling less than $5,000 for Sales and Use Tax administered by the Board be presented to the Attorney General for review by delegating this authority jointly to the Board's Executive Director and Chief Counsel; and adds the requirement for persons whose estimated tax liability averages $20,000 or more per month to submit payment by electronic funds transfer (EFT) for certain Special Taxes accounts.

Assembly Bill 2898 (Chapter 1052, Committee on Revenue and Taxation) authorizes the Board to grant equitable relief for sales tax to innocent spouses, under procedures prescribed by the Board, if the facts and circumstances warrant; provides relief to a taxpayer whose employer withheld delinquent taxes or fees from the taxpayer's pay, but failed to remit amounts to the Board; provides relief of the late payment penalty in cases where the taxpayer enters into and successfully complies with an installment payment agreement; prohibits the disclosure of confidential taxpayer information by tax preparers; and extends the sunset date for the managed audit program for two years.

Senate Bill 876 (Chapter 838, Escutia) requires every person who purchases a new tire from a retail seller of new tires to pay a California tire fee of $1.00 per tire until December 31, 2006, and $0.75 per tire after that date. The definition of "new tire" is expanded to include a new tire sold with a new or used motor vehicle, including the spare.

Senate Bill 1362 (Chapter 1085, Poochigian), with respect to the disabled veterans' property tax exemption, increases the current income threshold from either $24,000 or $34,000, to $40,000.